The Real Face of Healthcare Reform

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With Washington stalemated and the government’s new online medical insurance exchanges trying to work out the kinks, much of the nation is fixed on the fate of Obamacare. To really understand where our health system may be headed, however, I suspect that Peter Drucker would have turned his gaze elsewhere: to ThedaCare.

ThedaCare is a community health system with more than 6,000 employees working at five hospitals and 22 clinics across Northeast Wisconsin. Over the past decade, it has established an extraordinary record of raising quality (with nearly 100% of its patients now rating their experience a 5 out of 5) while controlling the cost of inpatient care (down 25% since 2007).

The secret: ThedaCare uses Lean, a set of management principles originated by Toyota in the late 1940s to build cars.

“Believe me, nothing else works—and I’ve tried everything,” says physician John Toussaint, ThedaCare’s former chief executive who these days runs the ThedaCare Center for Healthcare Value, which he launched five years ago to help spread what he and his colleagues have painstakingly learned.

Perhaps their biggest lesson is just how hard it is to institute real reform: practicing evidence-based medicine, paying for value as opposed to volume and implementing Lean.

“Lean is not a program; it is not a set of quality improvement tools; it is not a quick fix; it is not a responsibility that can be delegated,” Toussaint and Texas A&M professor Leonard Berry explained in a piece they wrote earlier this year in the journal Mayo Clinic Proceedings. “Rather, Lean is a cultural transformation that changes how an organization works . . . It requires new habits, new skills and often a new attitude throughout the organization.”

Toussaint’s a-ha moment came in 2002, when as ThedaCare’s CEO he decided that he needed to look outside the healthcare sector to stimulate his thinking for how to systematically upgrade clinical performance. He visited Ariens Co., a manufacturer of snow blowers, and was stunned at what he saw: Front-line workers, teamed in small groups, were solving quality issues on the spot.

“The power they had to make radical changes to the product was just remarkable,” Toussaint recalls. “I thought, ‘These snow blowers are getting better care than our patients.’”Ariens was using a version of Lean. Toussaint was hooked.

As I’ve noted, Drucker’s influence on the Toyota Production System was profound, and so it’s not surprising that he would have found much to admire in ThedaCare’s techniques.

For starters, ThedaCare has created a culture of continuous improvement, with staff at all levels encouraged to ceaselessly experiment and then readily adopt what works, so that the bar is perpetually being raised. “Eventually,” Drucker pointed out, “continuous improvements lead to fundamental change.”

Second, ThedaCare is fully focused on delivering value, which it defines as enhancing the benefits that patients receive while lessening the burdens—both monetary and nonmonetary—that they have to endure. This approach stands in stark contrast to the way that many medical providers gauge “value”: health outcomes per dollars spent.

Every step in a particular process at ThedaCare—being admitted to the hospital, say—is broken down and laid out in a “value stream map” so that new efficiencies can be uncovered. “In knowledge and service work,” Drucker wrote, “the first questions in increasing productivity—and working smarter—have to be, ‘What is the task? What are we trying to accomplish? Why do it all?’”

The real beauty of making these maps is that it puts the patient at the center of everything. “There is no loss to the customer,” Drucker pointed out, “by eliminating activities that do not add value.” In the case of admissions, for example, the time it takes to be checked in to a ThedaCare facility has been cut in half.

Third, ThedaCare rallies all of its employees around a small number of well-articulated strategic objectives. Progress is measured, first and foremost, through a customer loyalty score. Meanwhile, other metrics—regarding patient and staff safety, mortality and readmission rates, employee engagement and financial stewardship—are widely broadcast and meticulously tracked. As Drucker wrote, “Information-based organizations require clear, simple, common objectives that translate into particular actions.”

Fourth, ThedaCare flips the org chart on its head, with nurses and others traditionally at the bottom of the hospital hierarchy trusted—indeed expected—to do most of the innovating. Those higher up the chain, for their part, must then slide into new roles as facilitators and mentors.

This can be particularly difficult for doctors to swallow. “We’re trained to be autocratic and controlling,” Toussaint says. Yet Drucker considered it essential to cultivate “a managerial attitude on the part of even the lowliest worker.”

Despite all the challenges, a growing number of medical institutions are going Lean. And when things click, the results are amazing. “You see the nurses and docs acting differently,” Toussaint says—huddling every morning to review performance targets, troubleshooting in real time, making sure the patient remains front and center.

Even a snow blower couldn’t ask for more.


Rick, thanks for this informative post! Thedacare is really doing a great job in the time when everyone doesn’t have the access to healthcare which he must have. The other remarkable thing about Thedacare is that patient is central here. When we make sure that patient is in the centre or front and healthcare system is revolving around him, it does bring improvement. 



I just saw Dr. Toussaint speak at the NE Shingo Conference and the results at ThedaCare are more impressive than what is described here. There was an entire conference track devoted to Lean Healthcare and the results presented by institutions like Mass General and Dana-Farber were equally fantastic. Lean will be a huge part of any improvement in our healthcare system. In addition to improving hospital and clinic healthcare delivery and operations, it can also dramatically improve the efficiency and effectiveness of training and knowledge transfer, which has a huge impact on the patient experience and outcomes. Here's a link to a white paper on the topic...